Pricing Models & Tools Flashcards
7 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Pricing Models & Tools flashcards as text
Which pricing model is best for maximizing revenue from a market with clearly separable high- and low-willingness-to-pay segments?
Answer: Third-degree price discrimination
Third-degree price discrimination charges different prices to identifiable customer groups (e.g., students vs. professionals) based on different elasticities.
A price index of 108 relative to competitors means:
Answer: Your price is 8% above the competitive average
A price index above 100 indicates your price exceeds the competitive benchmark by that percentage difference.
What is the key distinction between 'floor pricing' and 'ceiling pricing' in a pricing policy?
Answer: Floor is the minimum acceptable price; ceiling is the maximum customers will pay
The price floor is set by costs (minimum to remain profitable) and the price ceiling is set by customer value (maximum willingness to pay).
A company uses 'price-to-win' modeling for government bids. What is the primary input?
Answer: Competitor bid history and probability-of-win curves
Price-to-win models use competitive bid history to estimate the probability of winning at various price points.
In subscription pricing, 'expansion MRR' refers to:
Answer: Incremental revenue from existing customers upgrading or buying add-ons
Expansion MRR captures the additional recurring revenue generated from current customers through upsells, cross-sells, or tier upgrades.
Which scenario best illustrates 'complementary pricing' (also called captive product pricing)?
Answer: Pricing a printer low and charging premium prices for proprietary ink cartridges
Captive product pricing sets a low price on the core product and recovers margin through high-margin consumables or accessories.
A 'contribution margin waterfall' analysis adds value over a standard price waterfall by also showing:
Answer: How variable costs vary across customer segments and deal sizes
A contribution margin waterfall incorporates variable cost allocation by segment or deal, revealing true profitability beyond pocket price.